Banks Gird For Coming Fight With Obama's Pay Czar

For a short time, banks had
stopped offering guaranteed bonuses to lure in big names on Wall
Street. But now those bonuses are back, with firms offering
iron-clad guarantees of multimillion dollar payouts regardless of
how the firm or the employee performs.

Of course, all firms want to pay for performance. Or, at least,
they don't want to overpay for performance. Unfortunately, they
are often faced with the choice of availing themselves to the
upside of a top recruit by promising a guaranteed bonus--which
also exposes them to the downsize risk of underperformance--or
foregoing the upside by refusing to meet a market price that
includes guarantees.

A bar on guaranteed bonsues at some firms but not others will
create two-classes of banks--those that can attract top
performers and those that cannot. This isn't necessarily a
catastrophe--perhaps we want those heavily bailed out firms to
suffer the slow the death of the dearth of talent--but it should
certainly be openly and fully considered.